How long should I leave an overdue payment?

Question

So I freelance along side my day-to-day job, and I have a couple of regular clients who are very slow at paying.

On my invoicing system I have set 30 days for payment, but payment usually arrived more like 30-60 days after invoice was delivered.

Invoices are only delivered once the job has been completed.

Knowing how these clients are slow, should I change the payment terms and chase earlier?

If I want to go full time freelance, obviously I don't want to be damaging my relationships with clients. However on the other hand, if I do go freelance full time I need to know when money is coming into the bank.

How can I handle these sort of clients? Or should I concentrate/prioritize more reliable clients?

Answer 1

You must state explicitly what the penalties are in your sales conditions, including the delay after which the invoice is deemed overdue, what the fee is (usually an interest rate on the amount - there exist "legal" rates - with a minimum) and other relevant details of the procedure.

Of course if those conditions are new, you must inform the customer, preferably before the next deal. If they react negatively, you can still negotiate payment conditions that suit you better.

My own policy is to give my customer a first warning on expiry, wait for 2 weeks, give a second warning with threat of a charge, and after another 2 weeks confirm that I am applying the rule .

For the good customers I don't want to hurt, I drop the fine "as a commercial gesture" but tell them it's the last time.

You should see this approach as rather soft, arrogant companies don't hesitate to fine you on the first day. In any case, act immediately and make yourself respected, you'll never be penalized for that.